Gustavo Troyano

Gustavo Troyano asked about SEARA's domestic processed foods segment, specifically its margin performance, future expectations, and the ramp-up of the Hollandaise plant. He also inquired about Australia, seeking insights into the balance between demand for Australian beef and supply given higher cattle prices, and the performance of other Australian businesses like Walnut or processed foods compared to beef margins.

Answer

Gilberto Tomazoni, Global CEO of JBS, reported that SEARA's brand penetration and repurchasing increased, driven by innovation, leading to healthy margins and volume growth in prepared foods. He confirmed the Hollandaise plant is operating at full double-shift capacity and is being considered for expansion, with domestic volume growth of 70% year-over-year. For Australia, he noted strong profitability despite higher cattle prices due to robust export demand (75% of production) and expressed confidence in the business, including improved performance in salmon and pork operations.

Gustavo Troyano asked about Seara's processed foods segment in the domestic market, specifically its margin performance in Q3, expectations for future margins, and the ramp-up of the Hollandaise plant. He also inquired about the outlook for Australia, given higher cattle prices, the balance between demand for Australian beef and supply, and the performance of other Australian businesses like salmon and pork compared to beef margins.

Answer

Gilberto Tomazoni (Global CEO, JBS) reported that Seara's brand penetration and repurchasing increased, indicating a healthy brand with growing margins and volume in prepared foods. He confirmed the Hollandaise plant is operating at full double-shift capacity and is now considered for expansion, with domestic processed food volumes growing 70% year-over-year in Q3 and prices up 5.5%. For Australia, he noted strong profitability despite higher cattle prices due to robust export demand (75% of production), and positive performance in salmon (over 20% margin) and pork, expressing bullishness for 2026.

Gustavo Troyano of Itau BBA requested more detail on the U.S. Pork segment's margin compression, the reasons for an expected recovery, and any performance differences between its integrated and non-integrated operations.

Answer

Wesley Batista Filho, CEO of JBS Foods USA, attributed the weak quarterly performance to a one-off trade disruption with China. He stated that the recovery in margins should be immediate, not gradual, starting in Q3, and expressed optimism for the pork business due to lower grain costs and strong consumer demand as an alternative to high-priced beef.

Gustavo Troiano of Itau BBA asked about the key drivers for the expected acceleration in sugarcane crushing for the second half of 2025 and the potential triggers for higher sugar prices. He also inquired about the company's timing for initiating hedging commitments for the 2026 season.

Answer

Renato Junquera Pereira, Sugar, Ethanol and Energy VP, explained that strong crushing volumes in July and August are keeping the company on track to meet its full-year forecast despite earlier weather challenges. He expressed optimism for both ethanol and sugar prices, citing strong ethanol demand and lower-than-expected Brazilian sugar production as factors that should create favorable hedging opportunities for the remainder of the current season and for 2026.

Gustavo Troyano of Santander asked about the primary triggers and expected timing for a potential rise in sugar spot prices, and also inquired about the spillover effects of global trade disputes on Adecoagro's Farming and Crops business.

Answer

Executive Renato Pereira outlined a positive scenario for sugar prices, citing poor crops in the Northern Hemisphere and a likely smaller Brazilian harvest due to drought, which increases dependence on Brazil. Executive Mariano Bosch added that South American soy and corn benefit from trade tensions, and Adecoagro's rice operations are gaining access to new markets in Central America.

Questioned whether further operational adjustments are planned for U.S. beef in the challenging 2025 cycle or if margin shrinkage is inevitable. Also asked for an explanation of Seara's Q4 margin compression and its profitability outlook for 2025.

Answer

For U.S. beef, significant enhancements have already been made, and while there's still some room for improvement, 2025 will be more challenging. For Seara, demand is stable, and the main variable is grain costs, which currently have a good outlook. Profitability improvements are expected to continue, driven by efficiency, mix, and brand innovation, as the company has not yet fully capitalized on all its past efforts.

Gustavo Troyano from Itau BBA asked about the potential synergies and value generation from the partnership with BRF, and requested more detail on the profitability of boxed beef compared to fresh meat in the South American portfolio.

Answer

An Unknown Executive explained that administrative synergies with BRF are already being realized and that brand collaboration is just beginning with significant potential. They also confirmed that boxed beef accounts for over 25% of the South American mix, carries a 'two-digit' margin, and has strong potential for export growth.

Gustavo Troyano of Itau BBA asked about the South American cattle cycle, specifically seeking perspective on the timing of a potential inflection point in animal availability in Brazil in 2025. He also inquired how Marfrig plans to capitalize on increased U.S. demand for imported beef, given its plant certifications.

Answer

An executive explained that while 2024 remains a positive cycle, they anticipate a transition beginning in 2025 and are preparing with supply from feedlots. Regarding demand, the executive highlighted strong global demand from markets like Mexico and Indonesia, positioning Brazil as a key global supplier. They noted that the increased number of animals ready for slaughter helps minimize the cycle's negative effects.

Gustavo Troyano inquired about the cost outlook for the second half of 2024 considering the company's inventory strategy, and asked for details on the operational and financial impact of the recent Newcastle disease outbreak.

Answer

CEO Miguel Gularte addressed the Newcastle disease outbreak, stating that BRF's agile management and the BRF+ efficiency program enabled a rapid response. He explained that the company quickly redirected volume to the domestic market, leveraging the strength of its Sadia and Perdigao brands to minimize income loss. He expressed confidence in overcoming the challenge, aided by the 57 new export permits and the quick reopening of key markets like China and Mexico.

Gustavo Troyano from Itau BBA asked for a quantification of the BRF+ 2.0 efficiency program, seeking to understand how far the company is from its internal benchmarks compared to the initial 1.0 version. He also requested more visibility on the grain cost outlook, asking if there is room for further cost-per-ton reductions in the coming quarters, similar to the visibility provided in mid-2023.

Answer

CEO Miguel de Souza Gularte explained that BRF+ 1.0 used 2019 as a performance baseline, while BRF+ 2.0 shifted to using the company's own top-performing units as internal benchmarks, creating a continuous improvement culture. CFO Fabio Mendes Mariano added that regarding grain costs, BRF has adopted a similar strategy to last year. Despite harvest challenges, ample production is expected, allowing the company to potentially increase its position during the second crop harvest, which could lead to a retraction of costs in Q3 and Q4, positively impacting profitability.